Sustainability reporting: MEPs approve delayed standards for some companies

Sector-specific standards for EU companies and general standards for non-EU companies to be adopted in 2026 instead of 2024

Reporting timelines do not change, extent of reporting for EU companies does

Commission to try publishing standards for eight non-specified areas before the deadline

Parliament confirmed its agreement with EU governments on postponing adoption of sector-specific sustainability reporting standards for EU companies and general ones for non-EU companies.

With 562 votes for, 44 against and 15 abstentions MEPs approved provisional agreement reached by Legal Affairs Committee negotiators and the EU governments on 7 February and postponed adoption of all sector-specific reporting standards for EU companies and general reporting standards for non-EU companies by two years, until 30 June 2026. The new rules do not affect the reporting timelines as agreed under the Corporate Sustainability Reporting Directive (CSRD).

Timeline remains, but less reporting is required

EU companies will still have to report as planned in line with general sustainability reporting standards adopted by the Commission in July 2023. Later adoption of sector-specific standards for EU companies affects the extent of reporting, as the sector-specific part about companies’ particular impact on people and the planet in their area of activity will not be required before 2026. Since general reporting obligations for non-EU companies with turnover above 150 million euro and their branches in the EU with turnover above 40 million euro will only start to apply in 2028, adoption of reporting obligations in 2026 will still provide them with sufficient time to prepare.

Commission to decide about order of sectors

Despite agreement on delay, co-legislators consider sector-specific reporting to be a key source of information for investors when comparing the companies. That is why they want the Commission to endeavour to publish sector-specific sustainability reporting standards in eight non-specified areas as soon as they are ready before the deadline. While the Parliament and the Council provide the Commission and the responsible institution - European Financial Reporting Advisory Group (EFRAG) - with sufficient flexibility to decide which sectors should be addressed first, they also want to be regularly consulted at least once yearly and receive detailed information on the plans, adopted prioritisation and timeline in the development of the sustainability reporting standards.

Quote

Following the plenary vote, lead MEP Axel Voss (EPP, DE) said: “We will delay the deadline for sector specific standards under the Corporate Sustainability Reporting Directive (CSRD) by two years in order to give EFRAG the time to develop quality standards and give companies the time to put them into practice. Companies have been putting up with too much bureaucracy in years of crisis, from Covid to inflation.”

Next steps

The text needs to be formally approved by the Council before entering into force.

Background

The Commission proposed to delay adoption of sector-specific sustainability reporting standards for EU companies and general sustainability reporting standards for non-EU companies by two years in October 2023. The aim is to rationalise reporting obligations for companies and reduce related administrative burden while providing more time to EFRAG for the development of the reporting standards.